"As part of this plan, the Administration will take several concrete steps to ensure that single-family homes held by the Federal government eventually go to owner occupants, or to community-oriented non-profits committed to rehabilitating homes and selling them to owner occupants.
HUD and the Enterprises plan to increase to 30 days, from 10–20 days, the period in which only non-profits and owner occupants—as opposed to financial market investors—can make offers on the more than 12,000 homes in their Real Estate Owned (“REO”) inventory. These are homes in their portfolio that have failed to sell in a foreclosure auction.
Further, HUD and the Enterprises will continue to expand outreach to community-oriented non-profits and local governments regarding the sale of federally held homes. Because the Federal housing finance agencies guarantee mortgage repayments, the agencies often have a number of foreclosed homes in their portfolio. Under this new approach, they will cut through red-tape to ensure these properties quickly get on the market, with special access to those most in-need of such assistance.
The Administration also plans to increase financing for manufactured homes and 2–4 unit properties.
FHFA will authorize Freddie Mac to purchase mortgages for single-wide manufactured homes, thereby extending its 2020 authorization to Fannie Mae. The Enterprises also will continue outreach on financing options for manufactured homes. Such properties have been significantly improved in terms of quality and amenities and, because they are pre-manufactured, they can quickly enter the supply chain.
FHFA will authorize the Enterprises to take steps to expand the number of mortgages available for purchases of 2–4 unit properties that have an owner-occupant and renters. In so doing, it will be easier for prospective buyers to purchase and build wealth with these properties, and the supply of rental housing can expand as well.
Increasing the supply of multifamily housing is a cornerstone of the Administration’s plan to alleviate housing supply constraints. One proven way to do so is to increase the affordability of financing for building multiunit dwellings, particularly those targeted at low- and moderate-income renters.
The Low-Income Housing Tax Credit (LIHTC) is a tax credit to builders of low-income housing that have a proven track record of increasing the supply of affordable rental units. The Enterprises will build on this record by raising their equity cap for LIHTC from $1 billion to $1.7 billion—from $500 million each to $850 million each.
Treasury and HUD have formulated a plan to provide affordable financing from the Federal Financing Bank, which is tasked with buying, selling, and originating Federal loans and debt to State Housing Finance Agencies.
Treasury is making $383 million in the Capital Magnet Fund available for the purpose of encouraging affordable housing production. The Capital Magnet Fund is a competitive grant program for Community Development Finance Institutions and non-profit housing groups.
Legislative Steps
The Administration urges Congress to invest in the construction of affordable housing units, incentivizing the relaxation of exclusionary zoning and helping income-burdened renters.According to HUD, these investments will add or rehabilitate approximately 2 million housing units nationally. In particular, these supply-side policies will:
Construct or rehabilitate affordable rental housing units using Federal subsidies to support the financing, building, and maintenance of affordable rentals. This would be done principally by expanding the HOME Investment Partnership Program, the Housing Trust Fund, and the Capital Magnet Fund.
Expand and strengthen LIHTC. As noted above, LIHTC has a proven track record of incentivizing the building of affordable multifamily units. The Administration has proposed to expand LIHTC and target some portion of additional allocations to areas that are particularly supply constrained.
Build and rehabilitate homes for low- and middle-income homebuyers and homeowners. Based on the innovative and bipartisan Neighborhood Homes Investment Act, the Administration proposes a tax credit subsidy for building and rehabilitating homes for low- to middle-income homeowners living in economically vulnerable communities. Given racial disparities in home values, this proposal advances the Administration’s agenda on racial equity by boosting home values in economically distressed communities, which are disproportionately inhabited by people of color.
Incentivize the removal of exclusionary zoning and harmful land use policies. One of the most persistent and binding constraints on housing supply is exclusionary zoning laws and practices. For decades, such laws have inflated housing costs, locking families out of areas with more opportunities. Along with working with State and local governments to reduce such restrictions, the Administration proposes the creation of an incentive program that awards flexible and attractive funding to jurisdictions that take concrete steps to reduce barriers to affordable housing production."
